Professional Experts 1099 versus W-2
Posted: 15 July 2008 12:35 PM   [ Ignore ]
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Hello,

We have numerous situations where we hire Scientist, RN’s and MD’s to work on various projects that range from 1 day to 1 year.  The frequency in which they perform the work varies as well sometimes it can be as much as 40 hours a week for 3-6 months or sporadic working 2 days per week every other week for 6 months.  If we can prove they are “industry experts or licensed professionals” can we pay them on a 1099?

[ Edited: 15 July 2008 03:29 PM by Patrick Della Valle ]
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Posted: 15 July 2008 03:49 PM   [ Ignore ]   [ # 1 ]
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You have hit upon a huge problem in the area of Labor & Employment law—that is, companies paying individuals as “independent contractors” utilizing a 1099 as opposed to traditional “employees” for which a W-2 is required.  I can tell you that the instances in which you can utilize individuals on a contract (with the federal government, for example) or various “projects” is limited.  In most instances, the individuals will be considered employees of the company—regardless of how sporadic their hours or length of their employment.  Whether an individual is an “independent contractor” or a “traditional employee” turns on the individual’s control over their own work and the company’s control over the individual and the manner in which he or she performs her work.  The IRS publishes on its website a list of factors to consider in deciding whether any particular individual should be considered a “1099” contractors or a “W-2” employee.

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Posted: 15 July 2008 03:49 PM   [ Ignore ]   [ # 2 ]
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This can be a complicated question and my best advice is to review the IRS web site where this is addressed.  Go to Independent Contractor (self-employed) or employee?  The classifcation is determined by the facts and circumstances of each individual situation.  The facts that must be reviewed are (1) behavior; (2) financial; (3) type of relationship.

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Posted: 15 July 2008 05:30 PM   [ Ignore ]   [ # 3 ]
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are they “independent”?
—do they work whenever they want (or do you control their schedule)?
—do they work whereever they want (or do you control their workplace)?
—do they pick their own methods, tools, means, etc. (or do you control their job)?

are they “contractors”
—do they do their work for other employers?
—do they advertise their services/have licenses/offices?
—can they hire subordinates to perform the task you hired them to do?
—do they have the opportunity to experience profit or loss (as business owners)?

no?
then they’re employees.

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Posted: 16 July 2008 11:31 PM   [ Ignore ]   [ # 4 ]
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If the worker is performing tasks that are also being performed by employees it is difficult to justify a 1099 versus a W4.

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Posted: 17 July 2008 12:10 AM   [ Ignore ]   [ # 5 ]
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If these individuals have other clients for whom they provide services, and better yet, if they have set up a real consulting business with an address, phone #, business cards, then you have much better odds that lawfully tyhey can be retained as IC. On the other hand, if your organization is the only one for whom they provide services, it will be hard to justify IC status (no matter how brief the period of time of the retention). Ken Rose

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